"Solid operational performance, and continued cost control combined to mitigate the effects of the economy and the unseasonably mild weather of the third quarter," said Paul Barbas, DPL President and CEO. "Specifically, generation output increased 23%, resulting in reduced purchased power and higher margin."

Third Quarter 2009 Financial Results

Revenues decreased $7.2 million to $407.3 million for the three months ended September 30, 2009 compared to $414.5 million for the same period in 2008. This decrease was primarily the result of lower retail sales volume, lower average wholesale market prices, and decreased RTO capacity and other revenues, partially offset by higher average retail rates and increased wholesale volume.

Retail revenues increased $3.1 million resulting from the continued recovery of environmental costs and the implementation of the transmission cost recovery rider, offset by an 11% decrease in retail sales driven largely by milder weather and the economic recession. Total cooling degree days were 29% below the same period in 2008 and 34% below normal.

Wholesale revenues increased $3.0 million primarily as a result of a 167% increase in wholesale sales volume, partially offset by a 58% decrease in average wholesale market prices.

RTO capacity and other revenues decreased $13.3 million compared to the same period in the prior year due largely to a decrease in PJM transmission and congestion revenues of $9.8 million and a decrease in PJM capacity revenue of $3.7 million.

                   Three Months Ended September 30  
 $ in millions        2009       2008    Variance   
 Retail            $  318.8   $  315.7   $  3.1     
 Wholesale            30.9       27.9       3.0     
 RTO Revenues         21.5       31.3       (9.8  ) 
 RTO Capacity         33.1       36.8       (3.7  ) 
 Other Revenues       3.0        2.8        0.2     
 Total Revenues    $  407.3   $  414.5   $  (7.2  ) 


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For the nine months ended September 30, 2009, revenues decreased 2% to $1,183.5 million from $1,209.4 million for the same period in 2008.

Fuel Costs, which include coal (net of gains on sales), gas, oil, and emission allowances, increased $22.2 million for the three months ended September 30, 2009 compared to the same period in 2008 primarily due to a $17.7 million decrease in gains realized from the sale of coal and a 23% increase in generation output due to improved plant performance.

                        Three Months Ended September 30   
 $ in millions          2009         2008      Variance   
 Coal                      82.2      $  51.7      30.5    
 Natural Gas               1.9          6.5       (4.6  ) 
 Oil                       1.0          4.0       (3.0  ) 
 Emission Allowances       (0.7  )      0.0       (0.7  ) 
 Total Fuel Costs       $  84.4      $  62.2   $  22.2    


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For the nine months ended September 30, 2009, fuel costs increased $49.2 million, or 26%, to $241.7 million compared to $192.5 million for the same period in 2008.

Purchased Power costs decreased $54.8 million for the three months ended September 30, 2009 compared to the same period in 2008. The decrease in purchased power costs was due primarily to a 70% decrease in purchased power volume, a 59% decrease in average market prices, and lower RTO-related costs of $5.0 million.

                                               Three Months Ended September 30  
 $ in millions                                 2009      2008       Variance    
 Purchased Power                               $  7.0    $  56.8    $  (49.8  ) 
 RTO Charges                                      25.9      29.2       (3.3   ) 
 RTO Capacity                                     31.2      33.8       (2.6   ) 
 Recovery/(Deferral) of RTO Related Charges       0.9       0.0        0.9      
 Total Purchased Power                         $  65.0   $  119.8   $  (54.8  ) 


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Purchased power costs decreased $100.9 million, or 35%, to $188.0 million for the nine months ended September 30, 2009 compared to the same period in 2008.

Gross margin increased $25.4 million, or 11%, to $257.9 million for the three months ended September 30, 2009 compared to the same period in 2008. For the nine months ended September 30, 2009, gross margin increased $25.8 million compared to the same period in 2008.

Operation and maintenance expense increased $5.6 million for the three months ended September 30, 2009 compared to the same period in 2008. This increase was primarily the result of higher employee benefit, incentive and pension expenses of $4.5 million, a $1.4 million increase in deferred compensation costs, and a $1.3 million increase in the low-income assistance program funded by the Universal Service Fund (USF) rate rider. These increases were partially offset by lower operating costs at generation facilities of $4.1 million.

For the nine months ended September 30, 2009, operation and maintenance expense increased $25.9 million to $226.3 million compared to the same period in 2008.

Depreciation expense for the three months ended September 30, 2009 increased $0.8 million compared to the same period in 2008 primarily as a result of higher asset balances due largely to the completion of the FGD projects in 2008.

For the nine months ended September 30, 2009, depreciation costs increased $5.3 million, or 5%, to $107.8 million compared to the same period in 2008.

General Taxes decreased $0.5 million for the three months ended September 30, 2009 compared to the same period in 2008 primarily due to lower property tax accruals.

For the nine months ended September 30, 2009, general taxes decreased 3%, or $3.2 million, to $89.8 million compared to the same period in 2008.

Amortization of Regulatory Assets decreased $0.8 million for the three months ended September 30, 2009 compared to the same period in 2008 primarily due to the 2004 and 2005 storm costs being fully recovered in the third quarter of 2008.

For the nine months ended September 30, 2009, amortization of regulatory assets decreased $3.1 million to $4.5 million compared to the same period in 2008.

Interest expense for the three months ended September 30, 2009 decreased $2.3 million, or 11%, compared to the same period in 2008. This decrease was primarily the result of interest savings related to the redemption of DPL's $175 million 8% Senior Notes in March 2009, partially offset by lower capitalized interest costs of $1.0 million.

For the nine months ended September 30, 2009, interest expense decreased $7.2 million, or 11%, to $60.7 million compared to the same period in 2008.

Income Taxes for the three months ended September 30, 2009 increased $1.8 million, or 7%, compared to the same period in 2008, primarily reflecting an increase in pre-tax book income partially offset by a decrease in the effective tax rate.

For the nine months ended September 30, 2009, income taxes decreased $1.7 million to $84.2 million compared to the same period in 2008.

Liquidity and Cash Flow

DPL's cash and cash equivalents totaled $62.8 million at September 30, 2009, compared to $62.5 million at December 31, 2008, an increase of $0.3 million. The increase in cash and cash equivalents was primarily attributed to $292.2 million of cash generated from operating activities, net borrowings from the revolving credit facilities of $115 million, net withdrawals of $6.7 million from restricted funds drawn to fund pollution control capital expenditures and $5 million of cash from the maturity of a short-term investment, partially offset by cash paid to retire $175 million of long-term debt, $134.6 million of capital expenditures, $95.7 million of dividends paid on common stock, and $15.9 million used to repurchase outstanding stock warrants. At September 30, 2009, DPL had $7.9 million of restricted funds held in trust to fund pollution control capital expenditures.

Construction additions were $100.7 million and $168.1 million during the nine month periods ended September 30, 2009 and 2008, respectively, and are expected to be approximately $161 million in 2009. Construction additions in 2009 are expected to be financed with a combination of cash on hand, short-term financing and cash flows from operations. Capital projects are subject to continuing review and are revised in light of changes in financial and economic conditions, load forecasts, legislative and regulatory developments and changing environmental standards, among other factors. For the period 2009 through 2011, DPL is projecting to spend an estimated $540 million on capital projects. This does not include projected capital costs associated with the AMI/Smart Grid plan which was filed with the Public Utilities Commission of Ohio on August 4, 2009.

2009 -- 2010 Earnings Guidance

DPL has affirmed its 2009 earnings guidance of $2.00 to $2.20 per share and its 2010 earnings guidance of $2.35 to $2.60 per share. The Company will discuss its 2009 and 2010 earnings guidance during its third quarter conference call and webcast.

Common Stock Warrant Exercise; DPL Board Approves Limited Stock Repurchase Program

On October 26, 2009, a common stock warrant holder exercised 3.5 million warrants. As a result of this exercise, DPL issued 3.5 million shares of common stock from treasury and in turn received $73.5 million in cash.

On October 28, 2009 the DPL Board of Directors approved a Stock Repurchase Program under which DPL may use proceeds it receives from the exercise of warrants to repurchase common stock from time to time in the open market, through private transactions or otherwise. The Program will run through June 30, 2012, which is three months after the end of the warrant exercise period.

Conference Call and Webcast

At 9:30 a.m. Eastern on Thursday, October 29, DPL will host a conference call and Webcast to review third quarter 2009 financial results and discuss its earnings guidance. The conference call will be available in listen-only mode for investors, media and the public by dialing 888.679.8035 for domestic participants or 617.213.4848 for international callers. The access code is 30833453. Please dial into the call at least 15 minutes prior to the start of the call to register.

The Webcast can be accessed real-time at www.dplinc.com. Interested parties are encouraged to visit the Web site at least 15 minutes prior to the start of the Webcast to register. The Webcast will be available for replay on the DPL Web site in the investor relations section following the conference call.

About DPL

DPL Inc. (NYSE:DPL) is a regional energy company. DPL was named one of Forbes' "100 Most Trustworthy Companies" in 2009.

DPL's principal subsidiaries include The Dayton Power and Light Company (DP&L); DPL Energy, LLC (DPLE); and DPL Energy Resources, Inc. (DPLER). DP&L, a regulated electric utility, provides service to over 500,000 retail customers in West Central Ohio; DPLE engages in the operation of merchant peaking generation facilities; and DPLER is a competitive retail electric supplier in Ohio, selling to major industrial and commercial customers. DPL, through its subsidiaries, owns and operates approximately 3,700 megawatts of generation capacity, of which 2,800 megawatts are low cost coal-fired units and 900 megawatts are natural gas and diesel peaking units. Further information can be found at www.dplinc.com.

Certain statements contained in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Matters discussed in this press release that relate to events or developments that are expected to occur in the future, including management's expectations, strategic objectives, business prospects, anticipated economic performance and financial condition and other similar matters constitute forward-looking statements. Forward-looking statements are based on management's beliefs, assumptions and expectations of future economic performance, taking into account the information currently available to management. These statements are not statements of historical fact and are typically identified by terms and phrases such as "anticipate," "believe," "intend," "estimate," "expect," "continue," "should," "could," "may," "plan," "project," "predict," "will," and similar expressions. Such forward-looking statements are subject to risks and uncertainties, and investors are cautioned that outcomes and results may vary materially from those projected due to various factors beyond our control, including but not limited to: abnormal or severe weather and catastrophic weather-related damage; unusual maintenance or repair requirements; changes in fuel costs and purchased power, coal, environmental emissions, natural gas, oil, and other commodity prices; volatility and changes in markets for electricity and other energy-related commodities; performance of our suppliers and other counterparties; increased competition and deregulation in the electric utility industry; increased competition in the retail generation market; changes in interest rates; state, federal and foreign legislative and regulatory initiatives that affect cost and investment recovery, emission levels and regulations, rate structures or tax laws; changes in federal and/or state environmental laws and regulations to which DPL and its subsidiaries are subject; the development and operation of Regional Transmission Organizations (RTOs), including PJM Interconnection, L.L.C.